U r b a n T r e k k e r

More Short Sale (on the Market) than Foreclosure

If MRIS data is any indication, distressed properties trending short-sale could be a big threat for regular sellers. Regular sellers have a hard time competing with distressed properties owners, especially if these properties are priced way below the norm for that hood. On the flip side, this kind of condition represents opportunity for buyers. For the most part, short-sale properties tend to be in much better shape than foreclosures, especially if there are people still living in it, either owners or tenants. And short-sale and foreclosure are competitively priced.

From the resale front, this month market conditions for distressed properties weighs in more towards short-sale than foreclosure. That means many more 'underwater homeowners' are quickly trying 'to get out' from their situation. A recent study finds that no owners would default on a loan if they see their home equity drop only by 10%. However, 17% of household would default (walk away) even if they can afford to pay their mortgage, if their home values fall 50%. Unfortunately, in some pockets of our neighborhoods, prices have fallen below 50%.

Here's the data I extracted from  MRIS.

Active listings for NVAR market (Arlington, Alex., Falls Church, and all of Fairfax)

Total listings         4,507

Foreclosure        221  (4.9% of all listings)

under $500k       182

over $500k         39

Short-sale       601  (13.33% of all listings)

under $500k       491

over $500k        112 

Under contract            1,966

(total short-sale doesn't add up to 601 - something is missing here.. oh well)

You can see from the data, definitely the number of short-sale properties on the market crush foreclosures.

Here's the numbers for Prince William county, that used to be 'the' place to find foreclosure. Look at this stat. It's competitive with their adjacent neighborhoods north of I-95 (above).

Total listings 1,870

Foreclosure      96

Short-sale   239

Moreover, distressed properties over at Northern Virginia, on average carries higher price tags than at PW. Over in Fairfax, you can find homes on foreclosure list goes from $52k, condo in Alexandria - all the way - to $2.4M, a mansion in McLean. What striking is one-fifth of short-sale properties, are properties over $1M! Those custom built homes are on the market now at reduced price. Even a new home (never been lived) built by an architect over in my neck of the woods, is short-sale. This was a tear down. Think the architect got caught in the downturn..

Washington DC:

Total listings   2,523

Foreclosure 158          (6.2% of total listings)

under $500k 154

over $500k      4

Short-sale 168 (6.6% of total listings)

under $500k 152

over $500k   16

Under contract 93

I think for the lenders, short-sale is cheaper than going foreclosure. I heard sometime before from a lawyer, that foreclosure proceeding costs lenders on average $60k. (will be higher in some big cities).

Tysons Corner, the "New" Downtown

Fairfax County EDA boss is very confident that with Dulles Metrorail coming in to Tysons, it will make Tysons Corner the new downtown.

 The new Metro line to Tysons "will make the area explode,” Fairfax County Economic Development Authority CEO Jerry Gordon tells us. That’s saying something considering Fairfax already has more jobs than DC. Jerry politely turns the knife a bit more: “We’re the new downtown.” You can make statements like that with less than 5% unemployment (up from 1% in good times) and companies such as VW and Hilton moving their HQs to your community. Speaking of which, Jerry says FCEDA is in talks with a couple other companies “that are either household names or could be in 20 years.”

[via Washington BisNow]

Just fact checking Gordon's statement on jobs.

(click on image for larger view)

So, that's true Fairfax has more jobs than DC. (DC unemployment is twice of Fairfax).

image: Google

20 Offers. Really?

Seeing is believing. Just read the remarks on MRIS for this listing. The tax record shows that property was sold in 2004 for $432,600. Now on market for almost half of that price ($259k). So, list price is below 2004 level?

 

Multiple contracts is back in full force..

2 Things about Short-Sales

Besides all the things that you've read and hear ( here, here) lenders are getting better in processing short-sales. Short-sale can be a good opportunity (not for everyone, though). I know that's me saying it. However, the process of getting short-sale a done deal.. still take time.

Here are the dollars-and-cents dealing with short sale.

#1.Successful short sale really depends on how good the listing agent is.

I had represented buyers in multiple short-sale transactions. Dealing with a good, experienced 'short-sale' listing agents make a big difference. There are companies doing just short-sale businesses. You'll find that some settlement companies also take a proactive approach - when it comes to dealing with the lenders. I had a case, where the banks approved it in a matter of 4 weeks! Which is rare, really rare.  The listing agent has been doing a lot of short-sales, so she knows what it takes to close the deal. On top of that, my client gets closing assistance, and the  first mortgage lender agreed to pay the second  mortgage.

And my client asked 'why?' ..that fast. Sheesh..

#2. The listing price sometime is not the closing price you ended up with.

If the property still in good conditions and priced competitively, it'll invite contracts. So, multiple buyers compete for 'that one' house. Higher demand drives up its price. On the other hand, since a short-sale transaction has to be approved by the bank/s (holding the loan/s) or what the industry call 'third-party-approval' the list price might not be the one bank wants to approve. In MLS, there are two kinds of remarks, one for agent and one what the public - you - see. The one for agents have all kinds of remarks that buyer agents read before proceeding.

The take home message is: Don't get too excited when you deal with short-sale (even after contract is ratified). You should continue looking, just in case.. The contract you're putting on - doesn't go through. (Or, your lender refused to financed your purchase).

Because things do happen..

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How to Fix Mold

Mold is a common problem you find in distressed properties (bank-owned and the like), esp. if properties been on the market for a while. Most likely is these properties are vacant.

Here is a quickie way to trouble shoot mold..

At a Glance: Vienna

Vienna is unique because it has two metro stops (Dunn Loring and Vienna), there's the Town of Vienna and there's the rest of it (including Merrifield). In April of 2009, Fairfax Board of Supervisors created a Community Development Authority for the proposed Mosaic-Merrifield development. This Merrifield redevelopment deserves a revisit.

 Here's a little bit of history for Vienna, via Wiki.

The town was originally called Ayr Hill, after the name of the house built by early settler John Hunter, who named it after the place of his birth, Ayr, in Scotland. The name of the town was changed in the 1850s, when a doctor named William Hendrick offered to move there if the town would rename itself after his hometown, Vienna, New York.^[5]

The three zip codes for Vienna are 22180, 22181 and 22182. Below is comps for the three zips for the month of May.

Vienna

Zip code: 22180                               2009                           2008                 %

Ave. sales  price                                $520,835                 $566,265        -8.02%

Median sales price                           $450,000                $529,950        -15.09%

Total units sold                                         23                              26                 -11.54%

Days on market                                       134                             68               

Ave. list price for solds                 $560,661                  $611,798       -8.36%

Zip code: 22181

Ave. sales price                                $554,367                 $603,329      -8.12%

Median sales price                          $557,500                 $572,500     -2.62%

Total units sold                                       24                               24      

Days on market                                      75                               58

Ave. list price for solds                $587,321                   $632,396     -7.31%

Zip code: 22182

Ave. sales price                               $672,560                  $846,776     -20.57%

Median sales price                         $629,000                  $795,000    -20.88%

Days on market                                     25                                17

Ave. list price for solds                $716,189                   $920,553     -22.2%

Clearly data shows the higher priced market got hit the hardest. That is, zip code 22182.  Like any other hoods in the Metro DC area, Vienna is not immune to foreclosures, short-sales - because in some pockets - you can still find distressed homes in the $200's range.

More info on Vienna's demographic, population, education, etc. here and here..

data: MRIS

How to Access $8,000 Tax Credit for Dowpayment & Closing via VHDA Loan Program

A while back HUD announced that FHA will allow state housing finance arms to provide second mortgage so you can use the 'anticipated' $8,000 tax credit towards your downpayment and closing costs to buy homes with FHA-insured loans. (h/t NAHB)

The big question is "how do you do it?" Yup- that is how. Last weekend I was out with a client. We talked about this tax credit thing. (This client used to work for IRS). She says that "she is familiar about how tax credit works however, she found out that none of the lenders she talked to, know how to do it. If such thing is available, she would like to apply for one."

The thing with tax credit is, you have to file your income tax first before you can get the credit. So, if we're talking about the deadline for the credit, closing by November 30, 2009 - you have a problem here. Because technically, you can't access the credit before you file your taxes. See how it's complicate things a bit..

Don't worry now. We've got the the answer to this "how" can you access the credit for downpayment and closing. It is done through state housing agencies. According to NCSHA (Natl. Council Housing Agencies), a number of state housing agencies offer this kind of program: Colorado, Delaware, Idaho, Kentucky, Missouri, Nebraska, New Jersey, New Mexico, Ohio, Pennsylvania, Texas, Tennesse and Virginia. (if it's not listed here, there's no such thing available in your state).

It's just because I do biz in Virginia, will talk about VHDA program. This is how the program works, via VHDA:

• Eligibility: Borrowers must meet federal First-time Homebuyer Tax Credit requirements as well as VHDA's requirements regarding first-time buyer status, income limits, sales price, etc.
  
• Maximum income: The combined income of all household members may not exceed VHDA's maximum income limit. For example, Wash DC MSA, 2 or fewer can't make more than $86,900. (more about max. income limit, here)
• Maximum sales price: On the 2 or fewer max. income above, the maximum sales price is $408,100.
• Max. sales price/ total loan amount: The combination of 1st and 2nd loans cannot exceed VHDA sales/ income limits.
• Minimum credit score: 620.
• Qualifying ratios: FHA ratios of 31% payment-to-income/ 43% debt-to-income apply. 
• Required borrowers funds: Must have a minimum of 1% of the sales price "VERIFIED" as their own funds to be contributed towards the transaction or have it available as reserves.
• Pricing options: Pricing options are available (think this info is for lenders). Rate on first and second mortgage will be the same (this is good!). No points or origination fee charged on the second mortgage. - emphasis added

So the program is designed to fill the need of first-time buyers. Oh, not all FHA lenders work with this kind of program. Only VHDA approved lenders offer their products.

The catch: you have to take a "free" VHDA homeownership seminars. That's it. Here is where you find out about the classes..in Northern Virginia.

DC Condo Sales May 2009

Since we're in the mood of condo today, might as well take a quick look at condo sales in Washington DC. This is quite interesting. Just by looking at the numbers, DC condo market still struggling, maybe because prices still up. The average condo sales is up from $411,663 a year ago to $433,421. The median price is flat at $360,000. The same from last year.

What's good about condos on the market in DC is this: Inventory drops -3.9 percent from 1,530 to 1.471 units. Other than that, market kinda slow.

On the sales side. The number of condos sold last month declined -20.1% from 259 to 207 units. Year-to-date sales volume dips -23.1% from 1,053 to 810 units. Furthermore, about 79 percent of all condo sold in DC in May are condominium under $500,000!

Break it down into price range, looks like the million dollar (luxury) condos are the winner in this market conditions. Those condos over $1.25M showed some sales improvement. From the range of $1.25M to $1.49M, sales up are 150%  and over $1.5M condo - sales are up 140%. While condos between $150k to $800k are all saw sales in the red. What an interesting trend. This is pretty amazing..

 

click on image for larger view (+)

Who are those million dollar buyers? Obama people?

So, apparently low interest rates and robust buying season (like what Delta Associates condo report showed)  don't help DC condoscape that much..

data: MRIS

DC Region Condo Shortage (possible) in 2010..

Sounds like the tide might be turning in 2010 if sales continue at current (robust) pace. The Washington Biz Journal reports that new report from Delta Associates shows that prices down and sales volume exceeding 600 units for the first time - since 2007. The two factors contributed to the high sales volume are 1) historically low interest rates and 2) tis' busy buying season.

On the other hand, supply might be on the low end come 2010 said Greg Leisch, Delta CEO. Because it takes time to build new condos. So, take note of this.

"Greg Leisch said the dwindling pipeline — now at its lowest in five years — will likely result in a shortage by 2010, causing effective prices to rise. Prices tend to rise when there inventory-to-sales ratio is at three years or less. It is currently at 1.7 years in Arlington and Alexandria and 2.8 years in D.C. For the region, it is 5.1 years."

Remember those condos (Park Crest, Zoso, Io Piazza and more) that were converted to apartments because of market conditions, there's possibility that those apartements be converted back to condos to fill the gap...

[via Washington Biz Journal]

First American CoreLogic: Wash-Arlington-Alexandria Home Prices Decrease..

According to the latest LoanPerformance Home Price Index from First American CoreLogic, even though Washington-Arlington-Alexandria home prices have decreased by -13.84 percent in April, it's an improvement from March. In March, the home prices showed a decrease of -14.09 percent from a year ago. Across the U.S., the national housing price fell -10.2 percent in April compared to a year ago, which represents the smallest year-over-year declined in 2009.

The LoanPerformance HPI is a repeat-sales index that tracks increases and decreases in sales prices for the same homes over time, which provides a more accurate "constant-quality" view of pricing trends than basing analysis on all home sales. The LoanPerformance HPI provides the most comprehensive set of monthly home price indices and median sales prices available covering 7,649 ZIP codes, 958 Core Based Statistical Areas (CBSA) and 676 counties located in all 50 states and the District of Columbia.

 

for larger view, click here

The top ranking states for 'annual depreciation' this year are Nevada (-26.1%), Florida (-23.2%) took second place from California, California's home situation have improved (-22.7%), Arizona (-20.5%), and Pres. Obama's home state, Illinois in fifth rank (-17.4%).

Mark Fleming, chief economist for First Core Logic, says that..

“There is still a great deal of uncertainty with the housing market and the economy in general. But the rate of change in home price declines is beginning to show signs of not only a bottoming, but an improvement in both nominal and real terms, which is the more important indicator because real prices adjust for the distortions caused by inflation or deflation.”

Furthermore, according to the study, since U.S. home prices peaked in 2006 (over here in DC region, I think it's in 2007), national home prices have declined 21.2 percent on cumulative basis and currently down to the lowest price level in 5 years.

For more details here..